jail for takes. that's just the beginning. what went when when he tried to cash a check for his own bank. >> thanks for watching the cbs evening news with scott pelly is next. but can they reach a deal? >> it ta to tango and they're not there yet. >> if not now, when? >> pelley: chip reid, nancy cordes, and bob schieffer on the countdown to d-day. the alleged tactics of rupert murdoch's newspaper may now include stealing the medical records of britain's first family. liz palmer has the latest. u.s. troops are being cheated out of their money. armen keteyian's investigation shows us that it's happening on their own posts. and passing the wand. michelle miller on "harry potter" fans taking the magic into the future. captioning sponsored by cbs this is the "cbs evening news" with scott pelley. >> pelley: good evening, with the car heading for a cliff,

republicans and democrats are arguing about whether to turn left or turn right and they are fast running out of road. a deal to raise the government's borrowing limit will have to be done soon or the u.s. will ident and congressionalpr leaders met again this afternoon. the hangup is whether the deal will include tax increases as the democrats insist, or only spending cuts as republicans demand. we have three reports tonight on the deadline to default. first, chip reid at the white house where the president had a news conference today. >> reporter: scott, some republicans are calling for a stopgap measure to give more time to negotiate. the president says "absolutely not." >> i will not sign a 30-day or a 60-day or a 90-day extension. that is just not an acceptable approach. >> reporter: just last week, the president said a spirit of compromise had negotiators on track for a $4 trillion debt reduction deal.

now speaker john boehner says the most he can deliver is a deal about half that size. that has turned the president's optimism into exasperation. >> this is what they claim would be the single biggest boost to business certainty and confidence. so what's the holdup? >> reporter: the holdup is taxes. the president wants what he calls a balanced approach, including higher taxes on the wealthy and the elimination of tax breaks for certain corporations. >> this is what a balanced package means. it means that we've got some spending cuts; it means that we've got some increased revenue. i'm willing to move in their direction in order to get something done. and that's what compromise antails. >> reporter: the white house thought speaker boehner was moving in the president's direction on taxes, but over the weekend, boehner took tax hikes and the $4 trillion deal off the table. do you think he'll come back to the $4 trillion deal? >> i think speaker boehner has been very sincere about trying to do something big. >> reporter: the president said he understands boehner's control

of the republican house is limited. >> i think he's a good man who wants to do right by the country. i think that it's a... as chip alluded to, the politics that swept him into the speakership were good for a midterm election; they're tough for governing. >> reporter: but it's time, the president said to put politics aside and make some tough decisions. >> it's not going to get easier, it's going to get harder. so we might as well do it now. pull off the band-aid. eat our peas. >> reporter: scott, the president said that failure to reach a deal could lead to another recession that could be so deep that millions more americans could lose their jobs. >> pelley: chip, stay with us as we go over to nancy cordes on capitol hill. nancy, john boehner, the republican speaker of the house, pushed back today. >> reporter: scott, speaker boehner was not swayed by the president's call for a compromise on taxes.

>> the american people understand that tax hikes destroy jobs. the last thing we should be doing right now at a time of 9.2% unemployment is enacting more government policies that will destroy jobs. >> reporter: boehner shot down reports that he had briefly considered conceding on taxes. >> no tax increases every on the table. >> reporter: if he sounds defensive, it's because boehner is under enormous pressure from his fellow republicans. >> i think you need to do the right thing. >> reporter: congressman jim jordan leads a group of 175 fiscally conservative house members. how much can speaker boehner give on taxes and still get your vote on the bill? >> he can't give anything. look, i'm not going to be for raising taxes. >> reporter: how about closing tax loopholes, could you live with that? >> no. >> reporter: not even closing loopholes? >> we're not going to raise taxes. >> reporter: that leaves boehner little room to bargain. >> listen, i agree with the

president. we cannot allow our nation to default on our debt. but to prevent a default, a bill must pass the congress. >> reporter: and right now nobody knows what that bill will look like. so boehner took few questions today... >> sorry, but i've got to go to the white house. >> reporter: ...and headed back to the talks. boehner said he was not moved by the president's promises to reform medicare and social security as part of the deal. he said he didn't consider the proposals serious and said they would not fix the long-term problems, scott. >> pelley: chip, back to you at the white house. what are you hearing about the leadership meeting that wrapped up this afternoon? >> reporter: well, scott, we're hearing there was very little progress. the president said there must be revenues, the republicans continued to say absolutely not. we're also told that john boehner did very little speaking. he deferred to other republicans who are less interested in compromise. >> pelley: nancy, tell us a little bit more about this pressure that speaker boehner is getting from the right wing of his party.

>> oh, it's intense, scott. especially from the new members who campaigned specifically not on just not raising taxes but on lowering taxes. of course, they also campaigned to drastically reduce the deficit, and so you're seeing these two priorities come into conflict right now. >> pelley: nancy, chip, thanks very much. a default would be a shock to the financial system. remember september 29, 2008, when congress voted down an emergency bill to bail out the economy? the dow fell 777 points that day. bob schieffer is our chief washington correspondent and anchor of "face the nation." bob, with the stakes so high, why is there no progress? >> schieffer: scott, here is what is different this time. these leaders are willing to deal but the followers aren't. the reason speaker boehner backed away from a deal over the weekend is he couldn't deliver the republican votes needed to pass anything and he's got nothing on the president. the president can't deliver the democratic votes to make a significant deal because

democrats still refuse to touch the entitlement programs, just as the republicans don't want to touch anything that would raise revenues. and most experts will tell you both of those things are necessary to bring this deficit under control. what we've done here is gone from a gridlock to a sort of free-for-all now, and that's why nobody can be sure what's going to happen. >> pelley: where do you think this is going? >> schieffer: well, unless they find a compromise soon and raise the debt ceiling, the government will begin defaulting on its financial obligations, and if you think this economy is bad, wait until that happens. with leaders on both sides now, though, having so little influence on their followers, that could happen despite the leaders' best intentions and, scott, that is the really scary part of all this. >> pelley: thank you, bob. in britain rupert murdoch's media empire is at the center of a widening scandal over how far tabloids will go to get a story. it started with phone hacking, but now it includes allegations

of bribery. and elizabeth palmer tells us that the royal family and a former prime minister may be among the victims. >> reporter: today there were widely reported allegations that in 2007 the editor of "the news of the world" tried to pay $1,500 for a confidential directory of the royal family's phone numbers. and the seller? police officers assigned to protect them, who also sold the paper information on where the queen and her family would be. and there's more. accusations that another of rupert murdoch's papers, the "sun," obtained the medical records of former prime minister gordon brown's baby just after he was diagnosed with cystic fibrosis. it was rebekah brooks, murdoch's british c.e.o., who called the browns to tell them the story was running, this according to former political aide david muir. >> they didn't know how rebekah came across this information and

now that it's come to light it was obtained by what appeared to be an illegal method. >> reporter: as the revelations pile up, a police inquiry has moved into high gear. in 2007, an internal investigation at rupert murdoch's u.k. company is reported to have found clear evidence of illegal activity. but managers didn't take their findings to the police. instead, phone hacking victims who sued were paid to settle out of court. murdoch's son, james, now a director of the new york-based news corporation, authorized one payment for what's said to have been more than a million dollars. >> i acted on the advice of executives and lawyers with incomplete investigation, and that's a matter of real regret for me personally. >> reporter: now that has damaged rupert murdoch's business, he's already lost his most profitable newspaper here in the u.k., "the news of the world," and now an ambitious $12 billion attempt to expand into

the satellite television business has been delayed for months, maybe it will be blocked all together. shareholders are not happy. the share price of newscorp was down today in new york by 7.5%. scott? >> pelley: thanks, liz. in syria today, supporters of the assad dictatorship attacked the u.s. and french embassies. they smashed windows, threw rocks, eggs, and tomatoes. no one was injured. the attacks were payback after the u.s. and french ambassadors showed support last week for anti-government protesters. libyan rebels are closer to qaddafi's stronghold than ever before. mark phillips is with them. american soldiers can't win this battle of midway, because it's rigged. and fans pick up harry potter's story where the author left off, when the "cbs evening news" continues.

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opponents have a stronghold. >> reporter: in a war known for swings of mood and fortune, there's a new judgment to the step of the soldiers joining the rebel fight against moammar qaddafi up in libya's western mountains. this has become the war's newest and most dynamic front, where the rebels have pushed closest to qaddafi's seat of power in tripoli. it's also where those manning the forward positions say qaddafi is fighting back. >> he's still shooting missile. >> reporter: on this village? >> it's dangerous for you. >> reporter: qaddafi is definitely still shooting. we were able too pull back quickly as the old soviet-style and highly inaccurate grad missiles began to drop. but the rebels held their positions under the daily barrage. this is important ground they've taken. this is the furthest point of the rebel advance so far.

it's a little village, qawalish. the rebel positions appear to be in those buildings just along the ridge there. it's now being targeted by grad missiles fired by qaddafi forces. from here to tripoli? maybe 60 miles. and where are the qaddafi forces? >> reporter: from wazin on the tunisian border, rebels have pushed qaddafi's forces out of a string of mountain towns and now hold a hundred-mile-long slice of territory on the high ground. when do you think you can push for tripoli? >> ( translated ): god willing, tomorrow. >> reporter: it's nato's air power that has made the advance possible, even if the system is rough. what's lacking? >> lacking is nato... precision nato strikes. >> reporter: rebels like ahmed shebani, who comes from vancouver, says he's been sending e-mails requesting nato air strikes, probably via the loose rebel command structure in benghazi. >> because they're moving in twos and small numbers and, you know...

>> reporter: the qaddafi forces. >> yeah, and it gets difficult to seek and destroy when they're just moving in twos, hiding under trees, camouflage. >> reporter: it's much too soon to talk of a sense of victory here, but there is at least a growing sense of progress-- in a libyan kind of way. how long have you been training? >> a month. >> reporter: one month. do you feel you're ready to fight now? >> i'm ready. any time. >> reporter: and "any time" is coming. mark phillips, cbs news, in libya's western mountains. >> pelley: in russia, the search is on for survivors after an overloaded cruise ship sank yesterday on the volga river. 41 people are confirmed dead, but more than 80 others are missing and most of them are children. survivors say the boat sank in just eight minutes. are american soldiers getting taken for a ride down the midway? armen keteyian investigates next. investigates

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>> pelley: powerful storms hit the nation's mid-section today. strong winds flipped tractor- trailers in iowa and tossed small planes around at an airport near chicago. and then there's the heat. parts of the midwest and south are baking in triple-digit temperatures. from the hot sun we move to some shady doings at a big summer attraction: the carnival. the worst part is, this story involves troops just back from the wars.

investigative correspondent armen keteyian found out that soldiers are being cheated at an event that's paid for by u.s. taxpayers. >> reporter: it was the annual fourth of july freedom fest last week at fort hood, one of the largest military bases in the u.s. soldiers just back from war or ready to deploy were spending the day with their families. >> i got a win right here! >> reporter: but there was no chance they would win at some of these games. >> oh, my god! >> reporter: the games are run by a texas company called century 21 shows. u.s. taxpayers pay century 21 through a government contract to entertain the soldiers and families of fort hood and another post in san antonio, texas. this man has been a carney for more than 20 years, working the carnival circuit building and managing games on the midway. we agreed to protect his identity and substitute his voice.

he told us as a military veteran he was disgusted when he learned that soldiers were being ripped off by some century 21 games. >> i couldn't rob a guy that just came back from war, has his wife and baby in his hands, and take his rent money. >> reporter: he showed us how it was done building this game t- ball, also known as screw pool, from scratch. tell me about the game. >> the object is the knock the golf tee out of the circle with the cue ball. you that ten times and i give you a big screen t.v. or a big teddy bear and all your money back. >> reporter: okay. now, did you just let me win? >> yeah, i did. now i'm going to let you lose. >> reporter: watch what happens when he moves the tee an eighth of an inch. >> we'll build your confidence, make you think you're a superstar then we break you down and take all your money. >> reporter: he told us he had seen people routinely lose $80 or $100 at a time or more. what's the most you've ever had somebody into the game..? >> couple of gs. >> reporter: we took hidden

cameras to fort hood on july 4. after three hours of watching soldiers lose their pay, it was time to ask some questions. does it bother you at all, ripping these soldiers off at this game? their hard-earned money... >> i didn't rip anybody off, sir. >> reporter: yes, you are, this game is completely rigged. >> no, it's not. >> reporter: it's a timer you control and you control it by where you put the... >> why are you sticking it on me? >> reporter: because you're ripping off the soldiers here on the fourth of july. >> it's a carnival, sir. we're here to make money. >> reporter: the manager that day for century 21 shows, jeremy benson, tried to put some distance between his company and the people that run the games. >> most of these people are independent contractors. >> reporter: in a statement century 21 shows said "it is our policy that all of the games operate fairly and if the company receives a complaint about a game, they will investigate it and any improper operations will be corrected, or the game shut down."

even though the manager told us they weren't his games, five minutes after we spoke with him, he shut down screw pool and two other games. the soldiers were told, scott, that the pool game was "broken." >> pelley: armen, i wonder, what is fort hood saying this? >> reporter: an official told us if these allegations have merit they'll take appropriate action. >> pelley: thanks, armen. harry potter cast his spell over millions of fans. now some of them are writing the boy wizard's next adventure. that's ahead. adventure. that's ahead. it's 2011, wonder where the durango's been

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better taste. better nutrition. the better egg. happened next. the mix-ups that can cost you next on cbs 5 how yo >> pelley: few fictional characters have the magic of harry potter. he has sold 450 million books worldwide, and he drew thousands this evening to the american premiere of his final movie here in new york. but some of his spell bound fans refuse to let harry go, and we asked michelle miller to introduce us. >> harry potter... >> reporter: "harry potter" creator j.k. rowling wrote the final chapter of the seven-book series in 2007, but since then tens of thousands of amateur authors have picked up the tale.

>> their imaginations just run rampant and instead of keeping it up in their heads now they can... they're, like, oh, i have this hilarious idea and i'm going to write it down and share it. >> reporter: jaida jones write what is is known as fan fiction, writers like her pen new potter plots on dozens of web sites, spinning new stories about the characters. >> i can't pick one. >> reporter: in college, jones and a friend co-authored "the shoe box project" a history of hogwarts school of magic. >> i didn't think anyone other than j.k. rowling can know exactly what the truth of the characters is but we as readers get a feeling for that truth. >> reporter: fan fiction has been around since the 19th century with stories and parodies based on "alice in wonderland," "sherlock holmes," even jane austen. but fan fiction exploded with the internet. one web site has two million stories posted, more than

500,000 of them based on "harry potter." >> it's huge. >> reporter: emerson spartz launched the fan web site mugglenet when he was just 12 years old. >> "harry potter" was the gateway drug for books for a generation. with the power of the internet combined with the intricate and detailed world j.k. rowling created, it's helped to catalyze a generation of writers. >> reporter: author j.k. rowling doesn't seem to mind. this fall she'll launch her own web site, pottermore, which may offer even more fan fiction fodder well after the last credit rolls on the big screen. michelle miller, cbs news, new york. >> pelley: that's the "cbs evening news" for tonight. for all of us at cbs news all around the world, good night. captioning sponsored by cbs captioned by media access group at wgbh access.wgbh.org

for many commuters. the protest, shutting down a san francisco bart station. "...it's scary it makes you wonder how safe is it?" a popular spot for joggers turns into a crime scene: 2 shootings in less than a week. what the victims have in common. "they didn't even want to acknowledge their mistake" a bank mix-up lands a customer in jail, for days. and that's just the beginning. how his life changed when he tried to cash a check from his own bank. good evening, i'm ken bastida. i'm dana king we have breaking news. a protest has forced police to close the civic center bart station in san francsico. no justice, no peace, disband the bart police this is video just in to the newsroom. the group "no justice, no bart" is protesting